Author: johnredwood

 

I do not think the issue of Scottish independence should be determined by whether in the next few years Scotland might be marginally better off or worse off financially. It should certainly not be determined on the say so of a few large companies, either telling the Scottish people they will cut jobs  if Scotland votes Yes, or telling them that an independent Scotland could make a few tax concessions to companies which would make things better for those companies.

The vote should be about whether most Scottish people want to remain British, or whether they feel they can only express their sense of identity by backing an independent nation. As a Unionist myself the last thing I want is to keep Scotland in the Union against the hearts and feelings of a majority of the Scottish people. We need willing  and loyal supporters of our union if it is to thrive. Nor do I want to see a highly marginal vote, with maybe just 52% in favour of the Union, with demands in a few years time to do it all over again. The Union needs stability and support from all parts. This referendum somehow has to be used to secure that support from most Scots, or has to provide them the moment to leave.

I hope we hear more emotional appeals for both an independent Scotland and for the Union. I hope one of those appeals reaches out to enough people to give us a clear answer. It is no good pretending this fundamental question of identity is not emotional. It is not a matter of fine accounting calculation. You do not enter a successful marriage by working out how you might get the better of the merger of your working lives and bank accounts. A successful partnership does not come from thinking how you can live off the other parties, but comes from energy, effort and thinking of  others as well as yourself.

A union of two countries is not just for a few years. You should not unpick it when you think you might have a few more years of higher tax revenue, or seek to put it together if you are down on your luck. It is about how you feel, how you define who you are, and what you think of the neighbours. A union of countries means sticking together during good times and bad. It means going to the aid of each other in war or financial disaster. Becoming independent means wanting to do for yourself what before the Union did for you. That is the fundamental  question.

 

The answer is the cut in top rate of Income Tax from 50p to 45p. (apart from the initial VAT increase).

That should come as no surprise to readers of this site, but will be a shock to many of the conventional pundits who have taken the precaution of not reading the latest HM Revenue and Customs figures which get in the way of their usual prejudice on the topic.

I do not understand where the Treasury got their £100 m cost of the 45p rate from. The Revenue and Customs figures for what actually happened is stunning proof that the tax cut from 50p to 45 has led to a big tax increase on the rich. Total income tax collected from people earning more than £150,000 has surged from £40bn to £49bn this year compared to last. It has more than made up for the loss of tax revenue from lower earners following the big increase in tax thresholds.

The 50p rate was costly. The UK lost high earners overseas, and encountered the ability of rich people to earn less and declare less income when rates are high. The rareified group of people earning more than £2m declared income of £12.2bn in 2012-13, but paid tax on £26 bn of income the following year with the lower rate. This small group of people alone more than paid for the rise in threshold to take many lower earners out of tax altogether.

The top 1% of earners now earn 13% of the income but pay 28% of the total income tax.  The top 5% earn one quarter of the income but pay around half the total income tax. This progressive structure works as long as the government does not get too greedy, setting a higher  rate which means the rich pay less because they either go or they earn and declare less.

The tax revenues generally are not as buoyant as the Treasury and OBR have been forecasting.Income tax, which brought in £152bn in 2011, fell in 2012, and only recovered to £158bn in 2013. This is despite a £9 bn tax hike on the high earners, showing the state is still collecting less from most taxpayers.

I wonder how much more revenue the Treasury would enjoy if the top rate were set at a more competitive rate? I suspect that too would see a further surge in revenue, money the state clearly needs to end the deficit. The very small group of people earning more than £2m a year will pay £10bn of income tax  this year, exactly double the previous year.

 

(These figures are taken from HM Revenue and Customs  Tax Liabilities Feb 2014 edition)

 

It is conventional for websites and newspapers to compete with each other to come up with a ludicrous story on April 1st that people fall for. As I thought about what mine should be, I concluded that truth these days is often much more extreme than fiction. Instead I thought I would list a few stories that are true that could have been good April Fool jests some years ago. I ask you to write in with your contribution in a  similar spirit.

UK to close 7 power stations producing cheap power because the EU does not like them . This will leave the UK short of power  on cold winter days, and will help  drive the price of electricity up substantially.

UK to rely for 20% of its electricity on wind power, generated by very expensive wind farms that we have to subsidise. The country will have to get round to building an equivalent amount of capacity to the wind farms to stand idle when they are producing, for the periods when the wind is not blowing. This will be done to limit the amount of CO2 the UK produces, so we can import products from elsewhere where they have cheaper power and produce more CO2. No-one will  worry about how much CO2 is expended building all the extra power stations for double banking.

The Environment Agency will decide that it should not carry on dredging the rivers and water courses in the Somerset levels, and will not maintain or increase the capacity of the pumps, so the levels can flood badly whenever it rains too much. This will be done in the name of restoring old wetland habitats under an EU Directive. The slogan will be “Water foul  before people”.

The UK will hand over most of the regulation of its financial sector to the EU, in the belief that they will judge it wisely and look  after our interests.

The UK will invite in an extra 250,000 people  a year, whilst saying it intends to cut its CO2 output,  and protect our green and pleasant land.

 

 

 

 

Today the Chancellor will remind us in a speech that some important taxes are being cut. This is the way to promote more jobs and rising prosperity. The aim is to get more people off welfare into work, and to create the conditions for more good jobs to be created for people to improve their living standard. I repeat beneath the recent summary sent out by the Conservative party of the main tax cuts of the last Budget:

 

“Tax changes coming into effect this week:

 

On Tuesday:

 

• Corporation tax will be cut by 1 per cent to 21 per cent. It has fallen from 28 per cent in 2010 and will fall further to 20 per cent in April 2015, making it the lowest corporation tax rate in the G7.

 

• Tax on business investment virtually abolished for most businesses. The annual investment allowance will be doubled to £500,000, and will be extended by a further year to December 2015. This means 99.8 per cent of businesses could pay no tax on investment.

 

• Business rates reformed so that:
  • The annual increase is capped at two per cent;
  • The small business rates relief is extended for a further year, so that over half a million of the smallest businesses pay reduced rates and over a third of a million pay no rates at all; and
  • Targeted help for the high street in the form of a £1,000 discount for retail properties takes effect, benefitting around 300,000 shops, pubs and restaurants

 

• Fuel duty is frozen again.

 

On Sunday:

 

• The income tax-free personal allowance increases to £10,000. 24.5 million taxpayers will benefit, with a further quarter of a million taken out of paying income tax altogether. From April, typical basic rate taxpayers will have gained by £705 from all increases announced by this Government. Three million people on low incomes will be taken out of income tax altogether.

 

• Employer National Insurance Contributions will be cut by up to £2,000. This new Employment Allowance will benefit over one and a quarter million employers, over 90 per cent of them small businesses. 400,000 small businesses will no longer pay employer National Insurance at all.”

This is in addition to the savers’ package of measures which we have already discussed on this site, increasing the ISA allowance, offering new Pensioner Bonds in the next financial year and freeing savers to  make their own decisions about their pension savings.

 

 

One of the myths of some  commentators is that politicians and parties should not  “bang on” about the EU because electors are not interested.  It is true that if you ask people if the EU is one of their main issues, or if they want to hear about the EU, the  large majority will say they have other matters which they think are more important. Those matters are often jobs, immigration and energy prices.

That is why, of course, political parties who want to meet the wishes of the people do have to “bang on” about the EU. The feature of migration which most worries people presently is the open border with the rest of the EU. Many want the government to stop benefit tourists coming here from elsewhere in the EU. Others want to stop workers moving here to undercut wage rates or take jobs from local people. There has to be an EU/UK  policy answer to the worries about jobs and migration.

The same is true of housing policy. As someone wisely said in a posting here, maybe the UK has a migration problem more than a housing problem. As we have been inviting in an additional 250,000 people a year during much of Labour’s time in office, that means we have to build a new city the size of Southampton every year to accommodate them. We have not been building anything like enough houses to keep up with the large numbers of new arrivals. This means they have to face poor quality housing,  living too many in the same property, whilst house prices generally are driven up by the extra demand.

People rightly want cheaper energy. They want to know the lights will stay on. Labour not only put through UK legislation that means dearer energy ahead, but also signed us up to EU directives and regulations which force us to close cheaper fossil fuel power stations and rely much more on expensive and unreliable wind energy. To solve the problem legally we need a new policy in the EU as well as at home.

The commentators also say that the Conservatives have to keep quiet about the EU because the party is split on it. This is no longer true. The Conservative party as a united whole voted against Nice, Amsterdam and Lisbon, and the associated large transfers of powers to the EU under those Treaties. The Conservatives have been long united in opposition to the UK joining the Euro, and are the one major party which says never to joining the Euro.

Being in government with the Lib Dems has not changed these views. We still think the Nice Amsterdam and Lisbon Treaties were wrong. We either want a new relationship which gets rid of the large powers the EU holds, or a vote to leave. Conservatives want to tackle people’s worries about jobs,  migration, homes and energy prices. All these now have a large made in Brussels element we have to change.  The commentators are wrong to churn out their silly soundbites that people are not interested in the EU and the Conservatives have to keep off the subject.

 

Visiting a school in my constituency on Friday reminded me that we have not talked much about education recently on this site.

Mr Gove is pressing on with his reforms to schools, largely unimpeded by the EU as this remains an area more under domestic control than most.

He has introduced free schools, where the early results are good. They offer parents an additional choice which is especially welcome in neighbourhoods with weaker schools. There are more than 170 of them up and running.

He has accelerated the Labour programme of Academies, giving schools more powers to make their own decisions.

He has continued the introduction and support for synthetic phonics as the best way to teach young children to read.

He has led revisions to what is taught, to seek to ensure that the best of English literature and the basics of our island’s story are taught in English and History.

Several teachers from my area have sent me an identical email saying they are having to work excessive hours, and spending too much time on unnecessary and bureaucratic tasks. I know this is not what the Secretary of State wants, as he has been keen to restore more school level decision taking and to campaign against a bureaucratic approach. I have written back to each offering to take up these worries with the Head of their school, but so far none of the teachers have taken up that offer.

 

 

 

Recently Mr Cameron set out more of the details of his proposed renegotiation with the rest of the EU, should the Conservatives win the General Election in 2015. He proposes negotiating over seven main areas:

 

• “Powers  flowing away from Brussels, not always to it
• National  parliaments able to work together to block unwanted European legislation
• Businesses  liberated from red tape and benefiting from the strength of the EU’s own  market
• Our  police forces and justice systems able to protect British citizens, unencumbered by unnecessary interference from the European institutions
• Free  movement to take up work, not free benefits
• Support  for the continued enlargement of the EU to new members but with new mechanisms in place to prevent vast migrations across the Continent
• And  dealing properly with the concept of “ever closer union”, enshrined in the  treaty, to which every EU country has to sign up. It may appeal to some countries. But it is not right for Britain, and we must ensure we are no  longer subject to it.”

This week the Chancellor has added to the task the need to protect UK interests from further centralisation of powers stemming from the Euro scheme and the need for its members to sign up to increased Brussels control over their economies and banking systems.

There is  now an opportunity to discuss this list. Some will wish to go further, others will see this as a substantial agenda to be getting on with following the election in 2015. What it should be easier to agree is the need for a referendum, so those who want out can vote for Out and those who think the new deal – however far it goes – is sufficient to warrant staying in can vote to stay in.

Many bloggers on this site repeatedly ask for full control over our borders again. The Conservative proposals seek to stop benefit tourists arriving and claiming, and would impose new restrictions on future migrations of workers. Some will want to go further. They will point out that during the Labour years we needed to build a new city the size of Southampton every year to cater for all the additional people arriving, many of whom came from the rest of the EU. This will be an important part of the debate over the renegotiation.